* Dow, S&P 500 post biggest daily percent drops since Aug 2011
* 10-year Treasury yields recede from four-year highs
* Oil prices fall (Updates with closing U.S. markets' activity)
By Caroline Valetkevitch
NEW YORK, Feb 5 (Reuters) - U.S. stocks dropped in a rapid selloff on Monday, with the Dow falling nearly 1,600 points at its low in its biggest intraday point drop in history, while U.S. Treasury yields receded from four-year highs.
Stocks' fall added to last week's pullback from record highs in the indices. During the session, the Dow briefly fell more than 10 percent from its Jan. 26 record, with the index down as much as 6.3 percent at one point.
Wall Street indexes closed off the lows of the day but the Dow and S&P 500 both fell more than 4.0 percent, posting their biggest daily percentage drops since August 2011 and erasing their gains for the year. The Dow is now down 8.5 percent from its record and the S&P 500 is down 7.8 percent since then.
"It looks to me like a typical type of scenario when you see a single stock flash crash where you'll see bids just disappear, stop orders get kicked," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "The overall market could have taken a cue from some of the bigger names."
The CBoe Volatility index closed at its highest since August 2015.
Selling hit all S&P sector, though the S&P financial index , down 5.0 percent, was the biggest daily percentage decliner, followed by healthcare, down 4.6 percent. Oil prices settled more than 1.0 percent lower, pressured by rising U.S. output and other factors. The Dow Jones Industrial Average fell 1,175.21 points, or 4.6 percent, to 24,345.75, the S&P 500 lost 113.19 points, or 4.10 percent, to 2,648.94 and the Nasdaq Composite dropped 273.42 points, or 3.78 percent, to 6,967.53.
The pan-European FTSEurofirst 300 index lost 1.51 percent and MSCI's gauge of stocks across the globe shed 2.96 percent.
U.S. Treasury yields fell from four-year highs after the selloff in equity markets sparked demand for the low risk debt.
Benchmark U.S. 10-year note yields surged to 2.885 percent overnight, the highest since January 2014, following data Friday that showed hourly wages rose in January.
The 10-year notes were last up rose 38/32 in price to yield 2.7093 percent, down from 2.852 percent late on Friday.
Signs that U.S. inflation is edging up have raised some traders' expectations that the Federal Reserve may hike interest rates four times this year. Fed officials have indicated that three rate hikes are likely.
The U.S. dollar rose against a basket of currencies as the U.S. bond market selloff levelled off.
The dollar index rose 0.45 percent, with the euro last down 0.61 percent to $1.2384.
In commodities, U.S. crude fell 1.99 percent to $64.15 a barrel, while Brent fell 1.4 percent to $67.62.
Spot gold steadied at $1,334.40 an ounce.
Additional reporting by Lewis Krauskopf and Karen Brettell in New York; Alasdair Pal in London and Wayne Cole and Swati Pandey in Sydney; Editing by Larry King and Nick Zieminski